In late April, Simple Flying reported that German flag carrier Lufthansa was losing around €1 million ($1.2 million) per hour. In the months since, the carrier has been able to trim its losses by around half, as the airline is now burning through €1 million every two hours, according to CEO Carsten Spohr.
2020 was a terrible year for airlines worldwide as they fought to deal with the fallout of the COVID-19 crisis. The peak of the problem came in mid-April. Indeed, on April 11th Lufthansa experienced its worst day with just 74 flight movements. On Wednesday, the German flag carrier managed 204 flights as it continues to deal with the impact of the second wave of COVID-19 in Germany.
€1 million every two hours
Speaking during an Aviation Straight Talk with Eurocontrol yesterday, Lufthansa’s CEO, Carsten Spohr, said,
“To use the numbers you just quoted, we indeed started with a million lost per hour. While we speak we are down to a million every two hours. So it is a significant improvement [but we’re] still hurting. But it shows that for our standards, the cost-cutting has gone a lot faster than what we would have thought.”
Some of the airline’s costs are solved by not flying planes. You don’t need to fuel an aircraft that’s not flying. Spohr pointed out that Lufthansa is only operating flights where it can make a profit right now. For some, it can break even by just carrying cargo in the belly. This appears to be the case on some airline’s transatlantic 747 routes, where passengers are just boosting the profits.
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However, one cost that doesn’t go away with grounded aircraft is that of staff. Spohr pointed out that since the start of the crisis, the Lufthansa Group’s employee pool has decreased by a fifth. Additionally, the airline has secured many agreements with unions for short-time work arrangements. This means that rather than a handful of employees working full time, more employees work, albeit part-time.
1/3 of €9 billion bailout has been used
In June 2020, Lufthansa’s shareholders voted to approve a €9 billion ($10.9 billion) bailout from the German government. According to Spohr, the airline has so far used just a third of the available funds. Spohr commented that he doesn’t believe the airline will draw the full amount of its bailout,
“We got up to nine billion from the government. At this point, we just took three. I actually don’t believe we will need the whole nine, depending on how the year will play out. But that was just the amount of money which is a maximum contribution. And even that is such a huge number.”
What do you think of Lufthansa’s spending improvement? Let us know what you think and why in the comments!